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Ritchie Bros. Auctioneers Incorporated sold approximately $4.33 billion of equipment through 356 unreserved auctions and its online equipment marketplace during 2016. This is a new annual record for the company, and represents a 2 percent increase in gross auction proceeds (GAP) compared to 2015.

“During 2016 we made strategic investments and acquisitions to better position our business for future growth, including the addition of an equipment sales listing offering, obtaining full ownership of Ritchie Bros. Financial Services, key bolt-on acquisitions to bolster our strength in certain regions and sectors, and the announcement of our impending acquisition of IronPlanet. All of these initiatives have built a stronger platform for our customers and shareholders as we expand our service offering and the solutions we provide equipment sellers.

“The two percent GAP growth we recorded this year was negatively affected by lower equipment values relative to last year, though lot volume, buyers, consignors and registered bidders all grew substantially from 2015, indicating strong operational growth. Lot volumes grew nearly 13 percent, the number of buyers and consignors grew by 12 percent, and the number of registered bidders grew by 8 percent. Regionally, our Canadian business led growth, and achieved yet another record year.”

During the fourth quarter of 2016, the company generated gross auction proceeds of $1.0 billion, a decrease of 9 percent compared to the fourth quarter GAP achieved last year. On a constant currency basis, GAP declined 8.5 percent during the fourth quarter of 2016 compared to the fourth quarter of 2015. As previously discussed on Ritchie Bros.' Q3 2016 earnings call, auction timing differences did affect the quarter, with both the fall Montreal and Columbus auctions of 2016 occurring in the third quarter this year, rather than in the fourth quarter as they did in 2015.

Ritchie Bros. conducted its final unreserved auction of 2016 on Dec. 21 in St. Louis, Mo. The company plans to release its full audited financial results for 2016 before market open on Feb. 20, 2017.

U.S. Performance

Ritchie Bros. sold approximately $2.1 billion of equipment and trucks in the United States during 2016 — unchanged from $2.1 billion in 2015. Certain regions of the United States generated strong performance, including:

• A 58 percent increase in GAP sold in Ohio

• A 50 percent increase in GAP sold in Las Vegas

• A 34 percent increase in GAP sold in Minnesota

• A 23 percent increase in GAP sold in Arizona

A number of company records were broken in the United States this year, including:

• On March 17 to 18, 2016, Ritchie Bros. sold more than $46 million of equipment and trucks at its largest-ever Denver, Colo., auction. The two-day auction also set new Denver site records for attendance (5,950+ bidders) and items sold (3,950+).

• On Aug. 17, 2016, Ritchie Bros. sold $21 million of assets at its Tipton, Calif., auction. This was the largest-ever auction held at the Tipton auction site.

• On Sept. 28 to 29, 2016, the company held its largest ever two-day auction in the United States, at its Columbus, Ohio auction site. More than $76 million of assets were sold at this auction, including $61 million on the auction's first day — the largest single day Ritchie Bros. has ever achieved at an auction in the United States.

International Participation at Auctions

International bidders are an important element of Ritchie Bros. auctions, as they generate global market pricing. During 2016, approximately 16 percent of GAP was generated by international buyers (successful bidders located outside the country of the sale), consistent with 16 percent in 2015. Approximately 9 percent of GAP generated in the United States was sold to international buyers, consistent again with 9 percent in 2015.

Online Sales

Ritchie Bros. attracted record online bidder registrations and sold approximately $2.1 billion of equipment, trucks and other assets to online buyers at Ritchie Bros. auctions and EquipmentOne customers in 2016, a 10 percent increase over 2015 and the highest amount ever sold online by the Company in one year.

EquipmentOne, the Company's online equipment marketplace, has generated more than $137 million in Gross Transaction Value (GTV) so far this year, representing more than 17 percent growth over last year.

Ritchie Bros. Financial Services Finances Over $285 Million in 2016

Ritchie Bros. Financial Services (RBFS) provided more than $285 million of financing to equipment buyers so far this year, a new record for this growing business and a 28.6 percent increase in financing activity compared to 2015. RBFS works with select lending partners to find financing solutions for customers purchasing equipment, including loans and lease-to-own programs. RBFS does not utilize company capital in its financing activities. During 2016, Ritchie Bros. purchased the minority interest of RBFS, and now owns 100 percent of the business.

Executive and Board Changes During 2016

Several important executive and board changes were announced during the year, including the appointment of Marianne Marck as chief information officer, and Becky Alseth as chief marketing officer. The company also welcomed Sarah Raiss as a director on the board.

$107.2 Million Return to Shareholders

Ritchie Bros. increased its quarterly cash dividend by 6 percent in August 2016 to $0.17 per share, and paid shareholders $70.5 million in total dividends during 2016. During the year, Ritchie Bros. also repurchased and cancelled 1.46 million shares, for a total cost of $36.7 million.

Corporate Development Activities

During 2016, Ritchie Bros. completed and announced several important acquisitions, to reach new customer segments and cater to a broader set of customer needs.

• On Feb. 19, 2016, the company announced its acquisition of Mascus — one of the world's leading online equipment listing services, adding to Ritchie Bros. menu of sales solutions for equipment sellers.

• On July 12, 2016, Ritchie Bros. acquired the minority interest of Ritchie Bros. Financial Services, providing the company with 100 percent ownership of its equipment finance brokerage business.

• Also on July 12, 2016, Ritchie Bros. announced that it has made a strategic minority investment in Machinio — a global search engine for finding, buying and selling equipment.

• On Aug. 2, 2016, the company acquired Petrowsky Auctioneers, an industrial auctioneer with a strong presence in the New England region of the United States.

• On Aug. 29, 2016, Ritchie Bros. announced its impending acquisition of IronPlanet — a leading online marketplace for used heavy equipment, for $758.5 million.

• On Nov. 15, 2016, the company acquired Kramer Auctions, a boutique agricultural auctioneer that caters to the needs of farming communities in Canada's prairie provinces.

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